Illustration by Victor Juhasz

Matt Taibbi, in his as-usual entertaining way, has written an excellent article explaining the roots and causes of the global financial mess we now find ourselves in.  He focuses particularly on the central role AIG played in bringing about this economic apocalypse and, more importantly, how the kleptocratic financial elites at the center of it all are forcing the American taxpayers to pay off their gambling debts to the tune of trillions of dollars.  Privatize profits, socialize losses.  And the theft is taking place mostly in secret with almost no democratic oversight.

As complex as all the finances are, the politics aren’t hard to follow. By creating an urgent crisis that can only be solved by those fluent in a language too complex for ordinary people to understand, the Wall Street crowd has turned the vast majority of Americans into non-participants in their own political future. There is a reason it used to be a crime in the Confederate states to teach a slave to read: Literacy is power. In the age of the CDS and CDO, most of us are financial illiterates. By making an already too-complex economy even more complex, Wall Street has used the crisis to effect a historic, revolutionary change in our political system — transforming a democracy into a two-tiered state, one with plugged-in financial bureaucrats above and clueless customers below.

As Taibbi and Glenn Greenwald point out, not only is the public outrage over the AIG bonuses justified, it is long overdue and far too little considering the scope and audacity of the overall theft (not just the bonuses).  We can no longer afford to sit back and allow a sociopathic oligarchy to loot the public treasury without fear of consequence.  I say bring out your pitchforks!

Technorati Tags: A.I.G., Capitalism, Wall Street bailout

The insurance giant A.I.G., which is at the center of the current economic meltdown, is going to pay $165 million in bonuses according to the NY Times.  The company, one of the main purveyors of credit-default swaps, has already received $170 billion in taxpayer money.  So their bailout amounts to nothing more than socialism for the rich, an upward distribution of income from regular Americans to the already wealthy. It’s an old story: those most responsible for economic disaster are rewarded while everyone else suffers.

A.I.G. claims it is legally obligated to make the bonus payments as a result of contract agreements made prior to the company’s demise.  But looking deeper into the Times article you see the bonus plan for the financial products unit (the section of A.I.G. that “sold hundreds of billions of dollars’ worth of derivatives, the notorious credit-default swaps that nearly toppled the entire company last fall) was locked into place in early 2008 just as the mortgage crisis was becoming most apparent.  So rather than merely trying “to encourage people to stay” as the article alludes, at least some of the bonuses are because these corporate crooks simply saw the writing on the wall and wanted to get their legally guaranteed loot – probably knowing the American taxpayer would come to their rescue if the worst ultimately happened.

Unsurprisingly, a senior government official claimed under the cloak of anonymity the Obama administration is outraged by the bonuses but, despite American taxpayers owning 80% of A.I.G., they are powerless to stop the theft:

The administration official said the Treasury Department did its own legal analysis and concluded that those contracts could not be broken. The official noted that even a provision recently pushed through Congress by Senator Christopher J. Dodd, a Connecticut Democrat, had an exemption for such bonus agreements already in place.

But the official said the administration will force A.I.G. to eventually repay the cost of the bonuses to the taxpayers as part of the agreement with the firm, which is being restructured.

If the now government-controlled insurer will have to pay back the bonuses, why even let them make them in the first place?  I say let these A.I.G. executives sue for their fraudulent bonuses; even if they win at least the administration will take a strong stand.  And if the government is upset and it is actually policy that A.I.G. will have to repay taxpayers then why does the official have to speak off-the-record?  The cleptocracy spreads far and wide.

Technorati Tags: A.I.G., Capitalism, economy, Wall Street bailout